MANGALURU: While a section of workers in the cashew industry has been demanding minimum wages in Mangaluru recently, one may believe there is a problem with the industry. Nullifying the effect of one factory on the national or global industry, experts believe a big problem exists in the cashew industry and is a complex one.
With a global oversupply, the prices of cashew kernels (raw cashew) are looking at a slump globally, which would mean a hit to the Rs 3,000-crore industry in the three districts of Udupi, Dakshina Kannada and Uttara Kannada, (with Udupi and Dakshina Kannada alone employing at least one lakh workers).
“One of the reasons for the fall in prices is the global oversupply of kernels,” said Giridhar Prabhu, past president of Karnataka Cashew Manufacturers Association (KCMA) and Kanara Chamber of Commerce and Industry. He points out to the growth to its rival in Vietnam, which has over the past few years put pressure on global markets, eating up most of the consumer base.
This has led to defaulters in many industries in the country.
Another reason for the industry being in a crisis, says past president of the KCMA Bola Rahul Kamath, is the increase of industries in non-cashew growing states, stepping into the fray while the industry was booming. “They too import raw cashew from African countries,” he said.
Experts believe that Udupi and Dakshina Kannada give more wages than other poorer states. This also makes them reduce their competitiveness.
“For instance, wages in Odisha are lower and they are in better proximity to markets in their neighbouring states,” says Prabhu.
Hike in the dollar rate has added to the woes of these traders. While there is a general risk involved in hedging as prices change every day, the slump in rupee to dollar has caused inventory losses to the traders.
“While the dollar rate increases from Rs 64 to Rs 73 in a year, the cost of the material went up by 14 per cent. Its up to the trader to either pass it on to the consumer or absorb it,” says Prabhu.
As per data, the industries use 40 metric tonne from the local raw cashew producers and import 2 lakh metric tonne.